In One Hour John Can Produce 20 Loaves of Bread

question 230

Multiple Choice

In one hour John can produce 20 loaves of bread or 8 cakes.In one hour Phyllis can produce 30 loaves of bread or 15 cakes.Which of the following statements is true?

• A) Phyllis has a comparative advantage in producing bread.
• B) John has a comparative advantage in producing cakes.
• C) Phyllis has an absolute advantage in both goods.
• D) John has an absolute advantage in both goods.
• E) Phyllis has a comparative advantage in producing both cakes and bread.

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Definitions:

Open Market

A market structure where economic transactions are conducted freely and transparently, allowing for unrestricted competition.

Gain or Loss

The financial result that occurs when the selling price of an asset differs from its original purchase price.

Bonds

Fixed income investment products representing loans made by an investor to a borrower, typically corporate or governmental, which pay periodic interest payments.

Retired

The status of an asset that has been removed from service or the phase in an individual's life when they exit the workforce.